MOSCOW (MRC) -- The chemical industry in UK could face a GBP7bn loss of exports if the country chooses to withdraw from the European Union (EU) without signing a new Free Trade Agreement (FTA), according to a report by trade credit insurance group Euler Hermes, said Chemicals-technology.
In addition, the report has warned that the machinery and equipment industry would face a loss of GBP3.5bn and the automotive industry would face GBP3bn loss, if new FTA is not agreed. The UK's chemicals, automotive, machinery, and equipment sectors are known to be highly dependent on the European market.
Euler Hermes European economist Ana Boata said: "The chemicals industry is one of the most important exporting sectors in the UK, with GBP55bn of goods sent abroad each year.
In its 'Brexit Me If You Can' report, Euler Hermes analysed the effects on the UK companies if the country leaves EU from two perspectives, one with a new FTA in place and one without an FTA. As per the report, in the absence of an FTA, margins would suffer dut to higher import and financing costs, and international divestment could lead to a reduction in exports.
Even the signing of a new FTA may lead to a drop of up to GBP2.5bn in exports for chemical companies, while the machinery, equipment and automotive sectors will each face a GBP1.1bn reduction in exports.
Euler stated that if the UK left EU without a FTA, the turnover of domestic companies could be reduced by 1% per year on average, compared to an existing predicted growth rate of 4% on average after 2017 if the UK stayed in the EU.
The entire scenario could result in up to GBP30bn, or 8%, of losses to the UK's total goods exports, and the country would require a minimum of ten years to fill the gap.
Additionally, the already high trade balance deficit could widen by GBP35bn to GBP180bn within 12 months of the formalisation of a UK exit from the EU.
Next year, the UK European Union membership referendum is scheduled to take place, and those in favour of a British withdrawal from the EU, commonly referred to as Brexit, say that outside the EU, the country would be better able to address its own issues.
UK became a member of the European Economic Community in 1973.
As MRC informed earlier, the European Commission is demanding that the largest chemical producer in the world, BASF, pay 200 million euros (USD217 million) in unpaid taxes to Belgium. The European Commission announced that Belgium had granted tax advantages that are at odds with the Commission's rules to at least 35 multinational companies, and ordered the country to recover 700 million euros in unpaid tax.
MRC